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Problem 07-4A Manufacturing: Preparation of a complete master budget LO P1, P2, P3 The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2019 ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2019 Assets Cash Accounts receivable Raw materials inventory Finished goods inventory Total current assets Equipment Accumulated depreciation Equipment, net Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term note payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and equity 59,000 487,500 93,010 433,000 1,072,510 638,000 (169,000 469,000 $ 1,541,510 215, 410 31,000 246,410 530,000 776.410 354,000 411, 100 765, 100 $ 1,541,510 To prepare a master budget for April May, and June of 2019, management gathers the following information To prepare a master budget for April, May, and June of 2019, management gathers the following information. 6. Sales for March total 25,000 units. Forecasted sales in units are as follows: April 25,000; May, 17,000, June, 22.400, and July 25.000. Sales of 259,000 units are forecasted for the entire year. The product's selling price is $26.00 per unit and its total product cost is $21.65 per unit. b. Company policy calls for a given month's ending raw materials inventory to equal 50% of the next month's materials requirements The March 31 raw materials inventory is 4,650 units, which complies with the policy. The expected June 30 ending raw materials inventory is 5.900 units. Raw materials cost $20 per unit. Each finished unit requires 0.50 units of raw materials c. Company policy calls for a given month's ending finished goods inventory to equal 80% of the next month's expected unit sales. The March 31 finished goods inventory is 20,000 units, which complies with the policy. d. Each finished unit requires 0.50 hours of direct labor at a rate of $15 per hour. e. Overhead is allocated based on direct labor hours. The predetermined variable overhead rate is $4.60 per direct labor hour Depreciation of $39,710 per month is treated as fixed factory overhead. f. Sales representatives' commissions are 5% of sales and are paid in the month of the sales. The sales manager's monthly salary is $4,900. g. Monthly general and administrative expenses include $34,000 administrative salaries and 0.8% monthly interest on the long-term note payable h. The company expects 25% of sales to be for cash and the remaining 75% on credit. Receivables are collected in full in the month following the sale (none are collected in the month of the sale) i. All raw materials purchases are on credit, and no payables arise from any other transactions. One month's raw materials purchases are fully paid in the next month. 1. The minimum ending cash balance for all months is $98.000. If necessary, the company borrows enough cash using a short-term note to reach the minimum. Shortterm notes require an interest payment of 1% at each month-end (before any repayment). If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance k. Dividends of $29.000 are to be declared and paid in May. I. No cash payments for income taxes are to be made during the second calendar quarter Income tax will be assessed at 40% in the quarter and paid in the third calendar quarter m. Equipment purchases of $149.000 are budgeted for the last day of June Required 1 Required 2 Required 3 Required 4 Required Required 6 Required 7 Required 8 Required 9 Required 10 Factory overhead budget. (Round per unit values to 2 decimal places.) ZIGBY MANUFACTURING Factory Overhead Budget April, May, and June 2019 April May June Total Labor hours needed Budgeted variable overhead Budgeted fored overhead Budgeted total overhead (Required 4 Required 6 > Required 1 Required 2 Required 3 Required 4 Required 5 Requir6 Required 7 Required 8 Required 9 Required 10 Selling expense budget. ZIGBY MANUFACTURING Selling Expense Budget April, May, and June 2019 April May June Budgeted sales Sales commissions Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 9 Required 10 General and administrative expense budget. ZIGBY MANUFACTURING General and Administrative Expense Budget April, May, and June 2019 April May June Total budgeted G&A expenses Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Required 8 Required 9 Required 10 Cash budget. (Negative balances and Loan repayment amounts of any) should be indicated with minus sign.) Calculation of Cash receipts from customers: April May June Total budgeted sales Cash sales Sales on credit Total cash receipts from customers April May June Current month's cash sales Collections of receivables Total cash receipts ZIGBY MANUFACTURING Cash Budget April May, and June 2019 April Beginning cash balance Total cash available ZIGBY MANUFACTURING Cash Budget April, May, and June 2019 April May June Beginning cash balance Total cash available Cash payments for 0 Total cash payments Preliminary cash balance 0 0 0 Total cash payments Preliminary cash balance Ending cash balance Loan balance April May June Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month